With a US plan for a GM bankruptcy taking shape, Italy’s Fiat said it would not take part in a second round of crisis talks in Berlin on Friday between German and US officials, and Canada’s Magna was reported to be about to follow suit.
Government spokesman Thomas Steg said a meeting with Opel bidders set for later in the day “will only start if interested parties have provided something substantial.”
Asked in an interview with Der Spiegel magazine released Friday if she ruled out Opel filing for insolvency, Chancellor Angela Merkel said her government “was making every effort to find another way. But a direct government stake in Opel is out of the question for me,” Merkel told the magazine.
Fiat said it did not want to expose itself to “unnecesssary and unwarranted risks” as long as it had insufficient information on Opel and while the German government had not yet worked out how it planned to provide financing.
“It is in fact unreasonable to expect… that Fiat would provide funds to an organisation whose financial details and position remain unknown to date,” it said in a statement.
“We remain committed to finding ways to bridge the expectations of both General Motors and the German government, but the emergency nature of the situation cannot put Fiat in a position to take on extravagant risks.”
Auto parts maker Magna, which has teamed up with Kremlin-controlled Russian bank Sberbank and metals tycoon Oleg Deripaska’s car company GAZ, was meanwhile reported to be close to walking away as well.
Executives from Magna and from GM have reportedly taken over half a floor in Berlin’s luxury Adlon hotel to try and thrash out a deal to be presented to German and US officials at a meeting later in the day.
Although the final decision on the fate of GM’s European operations lies with Detroit and Washington, Germany has a key role to play as it will provide billions of euros in loan guarantees to a suitable bidder. But according to a source quoted by Dow Jones Newswires, GM has put new demands on the table.
“GM doesn’t appear to have the will to reach a conclusion. New demands are being added all the time,” the source said.
According to German media reports, GM’s new demands mean that Magna is about to throw in the towel. As a result, the German and US officials’ talks set for later Friday looked in doubt, with a German government spokesman saying they would only start “if the interested parties have provided something substantial.”
An earlier round of talks lasting all night ended at dawn on Thursday in failure and acrimony, with Berlin accusing the US side of providing last-minute nasty surprises and employing “scandalous” negotiating tactics.
GM meanwhile on Thursday put the final pieces of a pre-packaged bankruptcy in place that would give the US government up to 72.5 percent of the new firm and sweeten the offer to bondholders.
GM was widely expected to file for bankruptcy protection ahead of a June 1 deadline imposed by the administration of President Barack Obama, which has provided the automaker with billions of dollars in emergency loans.
Merkel is under pressure from all sides to find a solution for Opel, with some 25,000 German jobs at stake just four months before a national election. Friday’s talks in Berlin were also meant to be about creating a trusteeship model that would keep Opel operating in the event of a GM bankruptcy with the help of a 1.5-billion-euro government loan.
GM employs 55,000 people Europe-wide, including around 7,000 in Spain, 4,700 in Britain at Vauxhall, 4,000 in Sweden at Saab, 3,600 in Poland, 2,600 in Belgium and 1,800 in Italy.